FINANCE NEWS: New guidelines for trustees' pay

Trustees can only be paid for services if there is a "clear advantage" in doing so, according to new guidance published by the Charity Commission.

The commission says that the advantages of paying trustees for services such as law and auditing must clearly outweigh the disadvantages, including the potential conflict of interest.

The guidance says: "In a situation where there is no favourable cost comparison with an outside agent or firm, and no special expertise or knowledge possessed by the trustee concerned, there is unlikely to be any clear advantage to the charity and the trustees would be expected to look outside the trustee body for the provision of the service."

The restrictions also apply to the employment of a business owned by a trustee or in which they are a partner, a managing director or have a significant interest.

Charities are also expected to consult their stakeholders, such as major funders and donors, before paying a trustee for a service.

The guidance comes just as the Government announces plans, published last week as part of ministers' response to the Private Action, Public Benefit report, to introduce legislation to give trustee bodies the legal right to pay trustees for services.

The Home Office says there will be safeguards to prevent misuse, such as a limit on the proportion of trustees who can be paid or a limit on the amounts they can be paid.

The Directory of Social Change welcomed the new guidance. "We have long campaigned against the practice of charities using the professional services of bodies to which one or more of their trustees are connected," said researcher Luke FitzHerbert.

A study carried out by the Directory of Social Change on 300 large trusts, showed that 21 had made payments to trustees or connected businesses in the past year, of amounts up to £200,000.

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